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Saturday, December 26, 2009

NATIONAL PARK, N.J. – Harry Schaeffer was a toddler when his family moved in 1955 to National Park, where nearby Eagle Point Refinery had been turning crude to gasoline, heating oil and other products for years.

Schaeffer grew up near the towers and tanks and got a job at Eagle Point as a young man. He spent 34 years controlling the valves and switches that moved oil products around the 1,100-acre spread of giant tanks before he was furloughed indefinitely this month.

Schaeffer and others at the Sunoco Inc. plant are among more than 1,000 workers who lost their jobs in the past few months in the refinery industry within 50 miles of Philadelphia, a bad sign for an enterprise that paid blue collar workers well for decades. And when the company hosted a job fair for workers facing furloughs or layoffs, the refinery positions available were far-flung — in Illinois and the Texas Gulf Coast.

"I wasn't going to be able to walk to any of them," Schaeffer said.

The region has been especially hard hit by troubles within the refining industry.

Eagle Point, on a piece of land jutting out into the Delaware River where eagles have been spotted, was owned by Texaco, Coastal Oil, and El Paso Corp., before Philadelphia-based Sunoco became owner in 2004.

In October, Sunoco announced its plan to idle refining operations and furlough some 400 employees, leaving a much smaller staff to handle already refined oil shipped in from overseas. The company has not announced a long-term plan for the plant. Refining functions remain at Sunoco's nearby plants in Philadelphia and Marcus Hook, Pa.

Since the Sunoco announcement, Valero said it will try to reduce its 550-member workforce by 100 at a refinery a few miles away, in Paulsboro, by offering early retirement packages. Valero also said it would close its refinery in Delaware City, Del., less than an hour's drive south, and cut 550 jobs there.

So far, the most drastic refining cutbacks in the U.S. have come in Delaware and southern New Jersey. But Anne Kohler, an analyst at Caris & Co., expects more plants to be idled in the East, on the Gulf Coast, and in Europe. She said refineries in California are likely to be spared.

It's been a quick reversal.

Just a few years ago, gas was $4 a gallon and there were worries the nation did not have enough refining capacity. But the recession, coupled with more emphasis on fuel efficiency, has driven down demand as refineries were built and were expanded in China, India and the Middle East.

Kohler said gasoline demand isn't likely to return to its 2007 peak and even if the economy turns around, refineries that are shuttered will probably stay closed, partly because it's so hard to reopen one once it's closed entirely.

At Northeastern plants, Valero spokesman Bill Day said, the profit margin is smaller because labor costs more there and the refineries tend to be older and less efficient than elsewhere — making them the most vulnerable to cuts.

It's Economics 101. But it's a blow to people like Schaeffer and others who thought they'd always be able to get a job at a refinery. Workers say wages of $33 to $37 an hour made it possible for them to bring in $100,000 a year with overtime.

The effects of the refinery cutbacks will extend beyond families.

"They pay $7 million a year in taxes," said Steve Sweeney, a Democratic state senator who represents the area. He said he expects Sunoco to be granted a major break on its property tax bill when it's no longer refining oil. "The local taxpayers are going to have to pick up that $7 million," he said.

Business owners also have good reason to be worried.

Virginia Apostolopoulos, an office manager for a string of Pat's Pizzeria franchises, says their store in National Park probably got 15 percent of its business from the refinery. Bob Palumbi is owner of National Park Auto, a garage that enjoyed a steady stream of business working on trucks of a half-dozen big contracting companies who streamed in and out of Eagle Point. One account brought in more than $30,000 a year.

"It's going to be a blow to this area, boy," he said.

Palumbi's brother, John, was among those laid off. The 61-year-old spent eight years at Eagle Point, most recently in its machine shop. Now, he spends time hanging around his brother's shop as he looks for a job.

John Palumbi said workers are getting two weeks of pay for every year they worked at Eagle Point once they sign settlement agreements, and can collect unemployment insurance. Many, he said, were remaining on unpaid furlough for a while in hopes that the company will reverse its decision — and to continue getting company-paid health benefits.

He said he thought his job with Sunoco was the best he ever had, despite the danger of fires and difficult 12-hour shifts that went overnight or began before dawn. He is upset that the cuts came to his community and in December, predicting things will get worse.

Schaeffer said he can tough it out, partly because his expenses are going down. He said he has just one more college tuition check to write for his daughter.

But he's facing new challenges. He's spent more than three decades building up knowledge specific to the tank farm and for the first time, he needs a resume for a job search.